Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.1240.
- Add a stop-loss at 1.1400.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.1350 and set a take-profit at 1.1400.
- Add a stop-loss at 1.1300.
The EUR/USD pair moved slightly below an important support level on Monday as investors reflected on the latest economic data and rising tensions between Russia and western countries. The pair is trading at 1.1315 ahead of the upcoming US consumer confidence data scheduled for later today.
Mixed US and Eurozone PMIs
On Monday, Markit published the latest flash manufacturing and services PMI numbers. According to the company, the Eurozone manufacturing PMI increased from 58.0 in December to 59.0 in January. This increase was better than the median estimate of 57.5.
On the other hand, the closely watched services PMI declined from 53.3 in December to 51.2 in January. This drop helped to push the composite PMI from 53.3 to 52.4.
Meanwhile, in the United States, the manufacturing and services PMIs declined to 55.0 and 50.9, respectively.
These numbers show that the Omicron variant had a negative impact on the two economies in January. However, analysts expect that the situation will improve in the coming month as the impacts of the variant starts fading.
The EUR/USD pair also declined because of the rising tensions between Western countries and Russia. Russia has accused the US and other western countries of pushing Ukraine to join NATO. As a deterrence, Russia has pushed more than 100k troops near the Ukrainian border.
There is a likelihood that the two sides could continue this conflict for a while after diplomacy options failed last week. Therefore, the pair declined because of the rising demand for the US dollar, which is often seen as a safe haven.
Later today, the key catalyst for the EUR/USD will be the latest consumer confidence data from the US. Due to inflation and the omicron variant, analysts expect the data to show that confidence declined slightly in January.
EUR/USD Forecast
The EUR/USD pair has been in a bearish trend in the past few days. The pair has managed to drop by about 1.50% below the highest level last week. It managed to drop slightly below the ascending trend line that connects the lowest level since November last year.
The 25-day and 50-day exponential moving averages (EMA). Also, the Stochastic Oscillator has moved slightly below the oversold level. Therefore, the pair will likely keep falling as bears target the next key support level at 1.1240.
